QNT 275 Week 1 participation Essentials of Business Statistics, Ch. 2

Adidas and Net Sales Increases (a question from one of your classmates and thoughts by Hermis)

Team

One of your classmates asked the following regarding Example 2.1 (Adidas Sales)

“Chapter 2 Tabular and Graphical Methods, specifically the example regarding the net sales over a 10 year period for Adidas. How would a business looking at the data and viewing the the net sales and seeing growth, but seeing a decline in the percentage of sales view the numbers as positive or negative? Specifically would a drop in the percentage say in Europe mean that they should focus more efforts such as more marketing in that area to increase the sales? Or would they view the decline as other regions grew more causing the loss in the percentage of sales and in turn focus on what would appear to be an emerging market in regions such as Asia or Latin America where they were able to steal 17% of the overall net sales from Europe and North America? After 10 years does the decline in North America and Europe overall percentage of Adidas sales say more about the efforts in those areas or more about the rise of Asia and Latin America efforts?”

This is a very good question and always goes to the cruxed of statistics as viewing the glass as “half full versus half empty”. This table uses a math term called a Proportion. A Proportion is a number that exists between 0 and +1.0. It is calculated by dividing the number of subjects/data points with a specific characteristic by the total number of subjects or sample size. For example (simple), If you are graduating 100 students, and 10 are accounting majors then 10/100 = 10% would be accounting majors.

As you can see from the chart, total sales has increased (overall based on hard dollars) for the 4 regions combined over the 10 year period. However, based on a Proportion, sales in Europe and the US has actually declined when compared to the other 2 regions of Asia and Latin America. Which tells Adidas that their Asian and Latin American presence is growing but US and European is declining. This type of data helps a firm identify their weaknesses and shore-up resources and efforts in order to improve performance. If the organization choses to do so, as Adidas may want to focus more energy on emerging markets such as Asia and Latin America. They may view Europe and the US as mature, over-saturated markets with way too much competition.

This reminds me a lot of McDonald’s Corporation. I bet if we had data that showed the same 4 regions, over the same period of time, the results would most likely be the same with a decline in the US but growth in other parts of the world. McDonald’s acknowledges that the vast majority of their sales comes from International stores.

What are your thoughts?